Clearly there is an urban housing crisis happening around the world, and it's forcing cities to rethink their approaches to real estate. But there's a solution: micro-apartments.

A global trend

New York City's housing shortage prompted Mayor Michael Bloomberg's administration to commission80 300-square-foot apartments in Manhattan this past summer. These prospective apartments, which are expected to rent for $2,000 a month, are so small that Bloomberg will have to amend zoning laws, which currently states that all apartments must be at least 400 square feet. The apartments in New York City will be just four times the size of a standard prison cell.

"People from all over the world want to live in New York City, and we must develop a new, scalable housing model that is safe, affordable and innovative to meet their needs," Bloomberg said in a statement announcing the apartments.

“We have a housing affordability crisis here; rents are through the roof,” Scott Wiener, the city supervisor who introduced the legislation for the micro apartments in San Francisco, told The New York Times.

Similarly, several international cities like London, Warsaw, and cities in China have all adopted a micro-apartment model, where residents pay high prices to live in tiny, but optimally-located, living spaces.

In Warsaw, Poland, micro-apartments are more of an art form and an experiment. A five-foot-wide "home" opened last week, where artist Etgar Keret plans to live for six months, and then eventually rent out. The bathroom is so small in the home that the shower head hovers above the toilet.

Paris, Tokyo and Singapore are also known for having tiny apartments.

An ongoing debate

But not everyone believes that these micro-apartments are the solution. Tenants rights advocates worry that this trend could set a bad precedent.

“Are we saying it is acceptable to box people up in little tiny spaces?” Tommi Avicolli Mecca, director of counseling at the Housing Rights Committee, a nonprofit organization, told the New York Times. “What standard are we setting here?”

These tiny apartments could also create a larger issue that divides classes. Will these new micro-units mean that only the super rich can afford to live in 800-square-foot plus apartments while the middle class settles for 300-square-foot closets?

Designing for micro-apartments

Some entrepreneurs are embracing the trend and finding ways to help people maximize their space. In order to live in these tiny apartments, the space has to be utilized cleverly.

Simon Woodroffe, founder of Yotel, has created a transforming apartment, with walls that move to create new spaces, or to allow a kitchen table to pop up from the floor.

"History will judge us for living in an absolutely primitive age compared to what it's going to be compared with the future of these types of home. People are going to say 'remember when they only had one space and it couldn't move around?'" Woodroffe said in an interview with CNN Money.

Other companies such as the Itzy Bitzy furniture store, have created smaller versions of end tables, dressers, and head boards, so inhabitants of these tiny apartments can still feel as if their home is furnished properly. Similarly, CB2, an extension company from Crate & Barrel, makes modern furniture for apartments and lofts. The furniture is to scale with smaller living spaces, but gives consumers trendy options. Companies such as West Elm, Milano Smart Living, and even super store IKEA have all surged on the small living trend.

It's clear that cities across the world see the only solution to the housing crisis is to think small.

Chanel 4 News via YouTubeThe transforming apartment created by Simon Woodroffe has the master bedroom descend from the ceiling.

via CNN MoneyAn 8 x 10 apartment in London is selling for nearly $500,000 because of its prime location.